Frankly, I'm not surprised that the Camaro would need to be discounted so much. While it appeals to me as an American who remembers the '68 Camaro, it is hardly suitable for the rough streets of China or for China's fuel-conscious drivers. (Gasoline is more expensive in China than in the United States at the moment.)
What is most interesting to me about CCT's post is how much the Camaro costs in China.
The Camaro lists in China for about $117K, and is now discounted to $93K. That's $93K for a car you can buy in the US for under $30K! So if we take $30K as the cost of a nicely-equipped Camaro, and add to that a generous shipping charge of $10K, we have a car for which GM should want to collect about $40K in China.
Of course, China will want a cut of that as well. Under its WTO commitment, China may charge a maximum import tariff of 25%, which would bring the price to $50,000.
Even with a huge discount, the Camaro's price in China is still $43,000 more expensive than the same car sold in the United States. Why?
Is it demand driven? Is Chevrolet simply unable to build Camaros fast enough that they can get away with charging that much for a car in China?
What is missing here? Why is the Camaro so expensive in China?
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I've never fully understood car pricing, but I have had a number of clients who have and they have made fortunes from it. One is based in Japan and buys thousands of used cars a month and then ships them to mostly Africa and Eastern Europe. Another buys damaged cars from wealthy countries all around the world and then ships them to mostly Central America, where they are repaired (cheaply) and resold.
ReplyDeleteI also had a client who, during the Asian crisis of 1997 (it was 1997, right), went to Korea and bought a ton of Jeep Grand Cherokees (taking advantage of the weakened Korean Won and dealers wanting to unload their cars) and shipped them to the US (where there was no duty because they were American cars and quickly sold them at an average $5,000 per car profit.
I had another client who looked at doing the same thing recently when Iceland's economy completely tanked, but Iceland's car taxes made that prohibitive.
Oh, and I have another client who buys massive used SUVs in the US (where prices have plunged) and then re-sells them in countries less concerned with such things.
Definitely some arbitrage opportunities in autos.
Thanks for your comments, Dan. I didn't realize there were so many arbitrage opportunities in autos.
ReplyDeleteWhile arbitrageurs take advantage of imbalances between supply and demand, I still wonder if the price difference of the Camaro is a factor of supply and demand. Intuition tells me it is not -- the gap is simply too huge -- but I could be wrong.
I think that the people buying a Camaro in China aren't worried about fuel efficiency, so the price of gas wouldn't be a factor. It's a show piece and thus, they can ask a pretty penny.
ReplyDeleteI am a chinese looking for a camaro in China while I graduate. as far as I know, the reason why imported car so expensive is that chinese government wants to protect domestic car industry, so the tax is increased in purpose. in addition, in china, people who has the purchasing power to buy an imported car will care about the fuel price too much.
ReplyDeletehopefully after graduation I will get my dream car camaro.
can some one explain how a country with such a cheap labor rate can afford a 50,000 dollar camaro. or is this considered a rich mans car over there
ReplyDelete@Anonymous,
ReplyDeleteGM won't be selling many Camaros in China due to the import tariff. Also, the Camaro is not exactly a "rich man's car." Rich people would be more likely to buy a luxury brand like BMW, Mercedes, Jaguar, etc. Chevrolet is not a luxury brand, so this puts the Camaro in somewhat of a no-man's land: an expensive car that isn't a luxury brand. Young people who saw the Camaro in Transformers will want it, but they won't be able to afford it.